Want to Boost Housing Values? Build a Walmart

Walmart is so large that the company is an economic indicator in and of itself. One percent of the American workforce—about 1.4 million people—works for Walmart. The megachain's 4,400 outlets account for 11 percent of all retail sales. Some 84 percent of U.S. households shop at Walmart; 42 percent of households do so regularly. Chances are you've heard of it.

If a Walmart has moved into your community, then you've definitely heard of it. The retailer is one of the most prominent targets of NIMBY activism. Walmart opponents say that the chain is bad for workers, bad for small businesses, and bad for communities.

A new study in the Journal of Urban Economics finds that one group previously thought to be hit hard whenever a Walmart moves into an area—homeowners—in fact stand to gain, and not just with close proximity to rock-bottom prices on retail goods. Homeowners see a modest rise in the prices of their homes when a Walmart moves into the neighborhood, according to the report.

The study, performed by Devin G. Pope at the University of Chicago and Jaren C. Pope at Brigham Young University, claims to be the first peer-reviewed investigation of the effect of Walmart on housing prices. Pope and Pope acknowledge that a sizable literature already exists on the effect of Walmart's retail expansion on labor, competition, and even aesthetics. Yet knowing Walmart's effect on housing prices is shorthand for the overall economic value of a Walmart retail outlet.

"Analyzing housing prices is a particularly useful way to understand the economic value of a Walmart entering a community," the study reads. "For example, when a Walmart is built, it generally is not built in isolation. The Walmart store often acts as a hub that attracts a variety of other businesses, which in turn, can also have impacts on housing markets."

The impact is quantifiable. According to Pope and Pope, in the 2.5 years after a Walmart opens in an area, houses within half a mile of the store see increases of 2 to 3 percent in value. Further out—from 0.5 to 1 mile from a store—houses see a price increase of 1 to 2 percent over their values from 2.5 years before the Walmart opened.

Solar panels on a Walmart in Buckeye, Arizona. (Walmart Corporate/Flickr)

The researchers base their conclusions on two datasets. One tracks where Walmart stores opened between 2000 and 2006 (159 in total). The other one comprises data for more than 1 million housing transactions within 4 miles of a Walmart opening during the same span.

While Pope and Pope aren't the only researchers to attempt to pin down the much-hyped correlation between Walmart retail expansion and housing prices, they say that their datasets have the right resolution to provide a reliable answer. A 4-mile radius area is one-twelfth the median U.S. county size, according to the research.

"In contrast to the county-level analyses conducted by most previous work on the impacts of Walmart, the micro-level nature of our dataset allows us to develop an identification strategy that can help us to overcome the potential endogeneity of the location and timing of Walmart opening," the study reads.

The more interesting result may be what the study says about the houses themselves. "The summary statistics indicate that, houses closer to a Walmart tend to be smaller in size, somewhat newer, and on slightly smaller lots," the study reads. "These small differences in housing characteristics suggest that new Walmarts were not built in random locations."

LED lamps grace the parking lot at the Walmart in Puerto Rico. (Walmart Corporate/Flickr)

On average, a Walmart opening yielded price increases of $7,000 for houses within a half mile of the store, and $4,000 for homes between a half mile and a mile of the store. (Note, though, that the study neglects Walmart outlets in purely rural locales for which housing data are not available.)

An increase in housing prices for homeowners who live near a Walmart doesn't necessarily mean that a Walmart is good for a community—that debate is beyond the purview of the study. But people who live near new Walmarts benefit from them in at least one immediate way.